Broadband gov subsidy should end in 2015 -Tory think tank

The government's current fixation with pushing for the deployment of faster broadband connections to most of the UK's population by 2015 should not shape its future policy, a leading Tory think tank has argued.

Policy Exchange - which published its The Superfast and the Furious report (PDF) this morning - added that, while it was not opposed to the £680m investment from the department for media, culture and sport's pot during this Parliament, it suggested that state subsidy for that project should end in 2015.

It's an interesting argument - given that the report failed to once mention the £300m being set aside from the BBC licence fee, which won't be dished out until after the next general election a little over two years from now.

Broadband minister Ed Vaizey recently confessed to MPs, who were querying how officials would use the Beeb's money, that "we've not taken a decision about that at the moment".

As it stands, the government has allocated £530m for the rollout of faster broadband to harder-to-reach parts of Blighty - mainly rural areas. The funding is supposed to cover the rollout and deployment until 2015. A further £150m has been put aside by the Chancellor of the Exchequer to cover major cities where decent broadband coverage is lacking.

The DCMS is hoping to see 90 per cent of homes and businesses in Britain upgraded to faster broadband speeds by 2015, but Vaizey has admitted recently that the target was "challenging" and some slippage already appears to have occurred.

Late last year, national telco BT - the only preferred bidder to have won any BDUK contracts with local authorities - landed a £56.6m joint project between Herefordshire and Gloucestershire. The project won't be completed until 2016 - a whole year after Whitehall's deadline.

Policy Exchange said in its report that it didn't want to barge in on the government's current spending plans with BDUK. But it argued that beyond that:

[T]he emphasis must be on achieving sustainable, effective competition, supported by appropriate regulation. Pushing the envelope on superfast connectivity is expensive, and unlikely to unlock the sorts of spillover benefits we saw when basic broadband first arrived.

So at the margin, any further public spending in this area should be focused on raising capability among both consumers and businesses – this will ensure we are making the best use of the connectivity at our disposal, and help generate the right demand signals for industry to respond to using whatever mix of technologies works best.

So as we think about broadband and how it fits in the economy, speed does still matter. But when it comes to deciding how fast is fast enough, strong consumers in a properly functioning, competitive market should be the judge.

The report called on the government to recast its future plans around broadband by moving away from its fixation on speed to "focusing explicitly on economic and social outcomes".

Policy Exchange is a proponent of binding together public services online - unsurprising from a think tank that counts Google's top PR wonk Rachel Whetstone among its trustees. It said:

In practice this means embedding connectivity far more firmly into mainstream government business. In Whitehall this covers everything from the advice for small businesses developed for GOV.UK through to the government’s growth strategy, infrastructure reviews and beyond. It also cuts across policy for the regions, for rural areas, for communities and local authorities.

Policy Exchange wants to see any future government subsidy for broadband connections funneled instead towards the roughly 8 million British citizens who remain oblivious to the internet by funding programmes that would encourage take-up.

It's important to note, however, that many of those individuals are elderly, disabled or poor. The report fails to address the spare cash needed to buy a computer and to pay for monthly broadband costs that realistically cannot be raised by the millions of UK citizens who rely on state benefits.

In July 2012, peers sitting in the House of Lords blasted the government's apparent preoccupation with broadband speed over access.

Lord Inglewood, who chaired a committee that took evidence from BT, Virgin Media and others, concluded at the time that it was clear that the government had committed to a massive digital-by-default agenda, but faced the risk of failing to address network infrastructure issues with "better provision" for all British citizens. Inglewood said this could result in the marginalisation or exclusion of some parts of the population.

Dana Tobak, who is managing director of ISP Hyperoptic, said in response to the Policy Exchange report:

The important thing is that the government continues to spend funds on long term infrastructure, rather than wasting taxpayer’s money on a programme that will immediately require further investment when it is finished. People also need to be educated on how to best take advantage of this infrastructure. There isn’t any reason that funding can't achieve all of these objectives.